AUD/USD Stretches to New Lows as US Yields and RBA Repricing Fuel Bearish Trend

The AUD/USD pair has been hit hard this week due to a combination of factors. The US dollar's strength, fueled by rising Treasury yields, is one major contributor. The two-year and five-year yield increases have been particularly significant, with the latter jumping 60 basis points in September, making it the highest monthly increase since 1988.

The RBA's decision to hike interest rates was widely expected, but Governor Michele Bullock's dovish tone during the press conference helped unwind some of the hawkish expectations. This led to a repricing of Australian front-end yields lower, narrowing the country's yield advantage over the US dollar.

As a result, the AUD/USD pair has been under pressure, with the bearish trend accelerating. The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicators are both signaling a strong bearish momentum. The 0.6835 level, which marked a double bottom in March, is now a key support zone.

While the price action suggests a continued bearish bias, the speed of the current move has made the AUD/USD pair look stretched. Historically, sustained moves in US Treasury yields have been rare, and this recent streak may be approaching its limits.